The consternation over the European Union’s demand that Apple pay vast tax arrears shows the need for a more coordinated fiscal policy across the bloc, Italian Finance Minister Pier Carlo Padoan said.
While Padoan declined to address the merits of the Apple ruling specifically during a television interview in Cernobbio, northern Italy, he said the case shows the hazards of the euro area’s patchwork of national tax systems.
“This episode signals very badly the need to find a more coordinated approach to taxing policy and taxing instruments in Europe which are still lacking,” Padoan said.
“This is the lesson I would draw and I would share with my European colleagues.”
The European Commission this week ruled that Apple must pay the Irish government as much as €13bn ($14.5bn) plus interest after the state illegally cut the company’s tax bill, in a record crackdown on fiscal loopholes. The decision sparked immediate protests from the Irish, concerned that it would hurt their reputation as a low-tax jurisdiction, a key plank of the country’s economic policy.
“Today there are companies in Europe, in the US, in Asia, that will wonder ‘how am I going to manage the risk of dealing with EU taxes when I do not have certainty of law?’” Apple chief financial officer Luca Maestri said in an interview with Corriere della Sera this week.
“It’s a risk that is very difficult to accept and impossible to manage.”
German Chancellor Angela Merkel told Italian Prime Minister Matteo Renzi at a summit in Maranello, Italy on Wednesday, that the Apple ruling was “a retroactive blow” and risks becoming a deterrent for multinationals which want to invest in the EU, according to the Italian newspaper la Repubblica.
Merkel reportedly said the tax ruling could also become an “extraordinary opportunity” for non-EU countries which want to attract companies scared off by the ruling — a comment which appears to refer to the UK after its’ referendum to leave the EU.
Merkel’s chief spokesman didn’t respond to a query about the report and Renzi’s office declined to comment.